Correlation Between Innovator and Syntax

Can any of the company-specific risk be diversified away by investing in both Innovator and Syntax at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Innovator and Syntax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovator 20 Year and Syntax, you can compare the effects of market volatilities on Innovator and Syntax and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Innovator with a short position of Syntax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Syntax.

Diversification Opportunities for Innovator and Syntax

-0.44

Correlation Coefficient

Innovator  Syntax

Very good diversification

The 3 months correlation between Innovator and Syntax is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Innovator 20 Year and Syntax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntax and Innovator is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Innovator 20 Year are associated (or correlated) with Syntax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntax has no effect on the direction of Innovator i.e., Innovator and Syntax go up and down completely randomly.

Pair Corralation between Innovator and Syntax

Given the investment horizon of 90 days Innovator 20 Year is expected to under-perform the Syntax. But the etf apears to be less risky and, when comparing its historical volatility, Innovator 20 Year is 1.11 times less risky than Syntax. The etf trades about -0.01 of its potential returns per unit of risk. The Syntax is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,176  in Syntax on October 21, 2024 and sell it today you would earn a total of  913.00  from holding Syntax or generate 21.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.68%
Values	Daily Returns

Innovator 20 Year  vs.  Syntax

Innovator 20 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Syntax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syntax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Syntax is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Innovator and Syntax

The main advantage of trading using opposite Innovator and Syntax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, Syntax can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Syntax will offset losses from the drop in Syntax's long position.

The idea behind Innovator 20 Year and Syntax pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.